Minor League Baseball players agree to expanded FLSA exemption in new contract

Will Congress go for it?

On April 3, Major League Baseball and the MLB Players Association agreed to the first-ever collective bargaining agreement covering minor league baseball players. As I previously discussed, this was only about seven months after the minor league players joined the union and MLB agreed to voluntarily recognize the Players Association as their bargaining representative.

The unionization effort and resultant contract followed years of acrimony between minor league players and MLB concerning what the players regarded as inadequate wages and living conditions. In 2015, minor league players, led by Aaron Senne, filed a class/collective action against MLB and its clubs, alleging they had violated the Fair Labor Standards Act and various state wage-hour laws by failing to pay the players the minimum wage and overtime. In March 2023, a judge approved a $185 million settlement in that case.

In the midst of that litigation, MLB successfully lobbied Congress for a partial exemption from the FLSA. In March 2018, as part of an omnibus spending bill, Congress amended the FLSA to exempt the following class of employees from its protections:

any employee employed to play baseball who is compensated pursuant to a contract that provides for a weekly salary for services performed during the league's championship season (but not spring training or the off season) at a rate that is not less than a weekly salary equal to the minimum wage under section 206(a) of this title for a workweek of 40 hours, irrespective of the number of hours the employee devotes to baseball related activities.

The exemption did not fully defeat the claims in the Senne action because it did not apply to conduct that occurred before March 2018 or to state law claims.

The exemption also did not apply to spring training and the off-season, and still required players to be paid a minimum weekly salary of $290 (the $7.25 federal minimum wage x 40 hours).

In the new contract, the players have agreed to support a broader exemption. The contract includes a draft letter that the Players Association agreed to send to “lawmakers/regulators.” That letter, in full, states as follows:

On behalf of Major League Baseball and its thirty Clubs (collectively "MLB") and the Major League Baseball Players Association (the "Players Association"), the labor union representing all domestic Minor League Players employed by an MLB Club ("Players"), we write to clarify our joint position on the treatment of Minor League Players represented by the Players Association under various wage and hour laws.

We write to express our joint support for legislation that would provide a narrowly tailored exemption from wage and hour laws (including minimum wage, overtime and recordkeeping requirements) that otherwise could apply to Players, in deference to the compensation and benefit provisions of the new collective bargaining agreement negotiated by the Players Association, on behalf of Players, and MLB, ("Minor League CBA"), provided the exemption would only apply to Players during the period in which they are compensated pursuant to the terms of the CBA.

The new Minor League CBA treats Players as salaried employees in which they receive weekly salaries throughout the calendar year (with the exception of a brief period around the holidays when Players are off and not permitted to perform work for their Clubs). Other benefits Players will receive under the Minor League CBA include but are not limited to health benefits, retirement benefits, housing benefits, and salary continuation in the event of disability resulting from a work-related injury. For this reason, we agree that Players who are receiving the compensation and benefits negotiated by the parties as set forth in our Minor League CBA covering the 2023-2027 seasons should be treated as "exempt" salaried professionals and, as such, need no recourse to sue for minimum wage, overtime and recordkeeping violations for the duration of the Minor League CBA.

The letter thus supports an expanded exemption from the FLSA that would cover spring training and the off-season regardless of the amounts the players are paid. For 2023, the collective bargaining agreement provides minor leaguers with $625 a week for off-season work at the team’s training complex and $250 a week away from the complex. Beginning in 2024, spring training pay is $625 a week. Although these amounts are a considerable improvement over past levels, they are still low enough to potentially create FLSA issues.

Further, the letter also seemingly makes the claim that players should be treated as exempt "professionals" under the FLSA. Two types of employees qualify as professionals who are exempt from the FLSA's minimum wage and overtime requirements. First, the “learned professional" exemption applies to employees whose work is intellectual in nature and requires knowledge of an advanced type that is the result of specialized academic study. This exemption typically applies to lawyers, doctors, accountants, engineers, and the like. The "creative professional" exemption applies to employees whose primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. The application of either category to professional baseball players is questionable.

The letter calls to mind the non-statutory labor exemption, which protects the policies and rules of multi-employer bargaining units, such as the teams within sports leagues, from antitrust scrutiny so long as they are negotiated with the employees’ union. The purpose of this exemption is to promote collective bargaining and labor peace. MLB and the Players Association are now seeking the same level of governmental non-interference when it comes to federal employment law.  Indeed, the parties have even agreed that wage and hour claims (federal, state and local) must be arbitrated on an individual, rather than class, basis.

The letter is a powerful play for MLB. Will Congress be persuaded?

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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